04 October 2024 State and Local Tax Weekly for September 6 and September 13 Ernst & Young's State and Local Tax Weekly newsletter for September 6 and September 13 is now available. Prepared by Ernst & Young's State and Local Taxation group, this weekly update summarizes important news, cases, and other developments in U.S. state and local taxation. Income attributed to a US taxpayer resulting from the IRC Section 965 transition tax does not qualify for the Nebraska dividends-received deduction (DRD), the Nebraska Supreme Court (court) has held in Precision Castparts Corp. v. Nebraska Department of Revenue, 317 Neb. 481 (Aug. 30, 2024). In so holding, the court concluded that "the language of [IRC] Section 965 does not deem the income included to be dividends, and … that [IRC] Section 965 employs pass-through treatment to attribute earnings to shareholders without deeming a distribution to have been made to shareholders." Background: Neb. Rev. Stat. Section 77-2716(5) provides a subtraction adjustment for dividends "received or deemed to be received" from corporations not subject to the IRC. This provision was enacted in the mid-1980s as part of an overhaul of the state's corporate tax system in response to the state Supreme Court's decision in Kellogg.1 In response to Kellogg, the Nebraska legislature amended its law to limit the extent of Nebraska taxpayers' apportionment factors to domestic values, meaning no controlled foreign corporation (CFC) factors, by providing that, "in the computation of the factors[,] only the part of a unitary business group that is subject to the [IRC] shall be included."2 The tradeoff was the enactment of the subtraction modification at issue — the subtraction of "dividends received or deemed to be received from corporations which are not subject to the [IRC]."3 In effect, Nebraska eliminated from taxation any distributions, actual or deemed, from a taxpayer's CFCs that are not themselves subject to federal income tax. Included within that amount are subpart F income inclusions, which as discussed previously, are "deemed" dividends, i.e., distributions of income (property) made by a CFC out of its earnings and profits to the CFC's shareholders. In line with the post-Kellogg tax reform, the Nebraska Department of Revenue (Department) consistently advised that subpart F income was a "deemed" dividend that should be subtracted from taxpayers' federal taxable income in calculating their respective Nebraska corporate income tax liabilities under Neb. Rev. Stat. Section 77-2716(5), thereby treating subpart F income as eligible for the DRD. Responding to changes made by the federal Tax Cuts and Jobs Act, specifically the one-time transition inclusion of IRC Section 965(a), the Department revisited this practice in 2018 and issued guidance denying DRD treatment to IRC Section 965(a) income. In 2021, the Department supplemented this guidance in Revenue Ruling 24-21-1, which discussed certain parts of subpart F that are expressly identified as dividends or deemed dividends by Congress and allowed a DRD for those items only. Any other items of subpart F income would not be afforded DRD treatment according to the guidance. The Department has been active in assessing taxpayers on these issues. The taxpayer in Precision Castparts filed a refund claim regarding its inclusion of deemed repatriated income under IRC Section 965(a) on its amended 2017 return. The Department denied the refund claim, and the taxpayer appealed the decision. The Lancaster County District Court affirmed the Department's decision, and the taxpayer appealed to the Nebraska Supreme Court. On appeal, the court upheld these determinations. Court finds IRC Section 965 inclusion income did not qualify for the DRD deduction: The court said that the issue was one of statutory interpretation; specifically, the proper interpretation of the phrase "dividends … deemed to be received" in Neb. Rev. Stat. Section 77-2716(5). The court observed that nothing in the language of IRC Section 965 explicitly deemed the income inclusion to be a dividend, noting that when Congress decides to treat certain inclusions as dividends, it explicitly says so.4 The court then turned to the taxpayer's argument that IRC Section 965 deems shareholders to have received distributions from their controlled foreign corporations (CFCs) and that such distributions, if received, would be dividends. While acknowledging that the argument had "some appeal" based on pre-TCJA provisions where earnings of CFCs were generally not taxed to shareholders unless and until they were distributed as dividends, the court concluded that was not how the IRC Section 965 inclusion operated. Citing the U.S. Supreme Court's recent decision in Moore,5 the court indicated that IRC Section 965 treats the inclusion as pass-through income, attributing the CFCs' retained earnings to the shareholders without regard to whether the earnings are distributed to the shareholders. Accordingly, the court concluded6 that the IRC Section 965 inclusion did not qualify for the deduction under Neb. Rev. Stat. Section 77-2716(5). For additional information on this development, see Tax Alert 2024-1778. New York City revises guidance on potential deviations from state corporate franchise tax regulations, which would impact future BCT regulations On September 12, 2024, the New York City (NYC) Department of Finance (Department) issued revised guidance, in the form of a White Paper, on its plans for finalizing the Business Corporation Tax (BCT) regulations. The Department is in the process of developing regulations to implement the BCT, which will be based on the recent New York State (NYS or State) regulations promulgated in December 2023 (see Tax Alert 2024-0140). Similar to its initial release,7 the Department's revised guidance discusses various decision points and potential deviations from State regulations after considering feedback and comments received from industry. Allocation of flow-through income from partnerships: The Department previously announced an intention to deviate from the aggregate methodology NYS uses to apportion partnership receipts. In particular, the Department suggested it would apply the UBT's income allocation methodology to the distributive shares of income that corporations received from partnerships. That proposal created uncertainty around income classification, income allocation, losses, expense attribution, and nexus, among other things. After considering public comments received on this proposed approach, the Department decided to abandon this method, stating: "Having reviewed the feedback and considered these questions, challenges and alternatives, the Department will not go forward with the initially considered methodology that uses the UBT sourcing rules to allocate partnership income earned by corporations. Although the City maintains that it does have considerable discretion in establishing the allocation of partnership receipts with respect to the BCT, uniformity across the State and City corporate tax regimes will streamline the process of tax administration and reduce the cost of doing business in the City of New York." The Department was not specific about how it will approach apportioning or allocating income from partnerships, but the White Paper implies NYC will conform to the NYS corporate franchise tax regulations. This method should result in consistent apportionment methods and tax calculations for NYS and NYC corporate tax purposes, but the specific language used in the City's regulation package will be important. Clear-and-convincing-evidence standard: The Department previously announced an intention to deviate from the "clear and convincing evidence" standard NYS adopted for overcoming presumptions that apply to income apportionment. Currently, NYS requires that taxpayers prove by "clear and convincing evidence" that an alternate apportionment method is a better reflection of their market in the State than one of the regulations' presumed methods (e.g., the billing address presumption). NYS imposes similar evidentiary standards when determining if a corporation is engaged in a unitary business. Despite receiving comments from practitioners and policy advocates supporting conformity with NYS standards, the Department's revised guidance states it intends to propose a regulatory framework based on individual facts and circumstances, relying on case law for determining which evidentiary standard applies. The practical implication of this decision remains uncertain, and the specific language (and examples) used in the regulation package will be important. Allocation of receipts from passive investment customers (PICs): Under the NYS corporate franchise tax regulations, receipts from a PIC for management, administration, and distribution services may be sourced to New York in proportion to the proportionate value of the PIC owned by investors and beneficial owners located in New York. This approach has informational requirements that can be difficult for many investment managers to meet. In particular, if the PIC's investor and beneficial locations are unknown, in whole or in part, the NYS regulations appear to require the taxpayer to presume that receipts from the PIC arise from the location where the investment management agreement is managed by the PIC. In the White Paper, and its prior release, the Department indicated it will not follow this back-up presumption and may instead presume that 8% of receipts from investors and beneficial owners with unidentifiable locations arise from NYC. Despite comments received questioning the percentage to be used and suggesting it was too high, the Department "believes that the 8% figure reflects a fair estimation of the economic activity within the City relative to the nation as a whole and is appropriate to use as [a] fallback allocation method." Billing-address presumption: NYS currently applies a billing address presumption to receipts from other services and business activities and from digital products/services if those taxpayers meet certain requirements. One of those requirements includes that the taxpayer must have more than 250 customers for that same product or service, or substantially similar products or services. In its prior guidance, the Department suggested that it would deviate from the 250-customer threshold and apply a 1,000-customer threshold. The Department now states in its White Paper that: "[a]fter considering the commenter's concerns regarding conformity with State Rules and taking into consideration that the State's billing address presumption is based on a Multistate Tax Commission model that is also employed by other States, the Department does not intend to alter the presumption threshold and will instead adopt the same policies set forth in 20 NYCRR [Sections] 4-3.2(d)(1)(ii) and 4-4.2(d)(1)(ii)." Therefore, NYC has indicated that the same 250-customer threshold that applies for NYS purposes will also apply for City purposes. Real estate mortgage investment conduits: In its prior release, the Department said that it intended to deviate from NYS, which decoupled from IRC Section 860E when it comes to reporting excess inclusion income (EII) on the NYS corporate franchise tax return. In response to comments expressing concern over this deviation, the Department responded, "the [NYC] Administrative Code … contains no statutory modification relating to excess inclusion. The Department intends to maintain conformity with the federal taxable income and retain the excess inclusion when calculating [entire net income], as has been historically done under the General Corporation Tax." The Department further stated that the feedback received noted concerns about the calculation of net operating losses in a year in which there is EII. The Department acknowledged that "[t]his feedback highlights practical concerns regarding the integration of the excess inclusion minimum into the BCT framework." The Department plans to issue additional guidance on this issue as it drafts the proposed regulations. For more on this development, see Tax Alert 2024-1732. California: The California Franchise Tax Board (FTB) on September 13, 2024, issued a Notice of Proposed Rulemaking to adopt amendments to its market-based sourcing rules for California corporate franchise and income tax purposes. The rules, which would be codified at California Code of Regulations, title 18, (CCR) Section 25136-2 (Proposed Regulation),8 are intended to apply for tax years beginning on or after January 1, 2024. The FTB released an "Initial Statement of Reasons" for the amendments, as well as draft language of the Proposed Regulation, which would affect asset managers, government contractors, research and development companies, and taxpayers in many other industries. The latest version of the draft language includes no substantive changes from the draft language released in June of 2021. (See Tax Alert 2021-1167.) One non-substantive change noted in the "Discussion of Necessity and Specific Purpose of the Proposed Regulations" in the Initial Statement of Reasons stated that Example 3 in Section 25136-2(c)(3), "Assignment Rule for Large Volume Professional Services," was deleted. The FTB explained that this deletion is "to ensure the examples do not unnecessarily complicate the correct application of the rule." However, Example 3 still appears in the September 13, 2024 version of the draft language, a matter that may need to be addressed by the FTB in order to align the draft language with the explanation in the Initial Statement of Reasons. Written comments on the Proposed Regulation are due by October 31, 2024. For more on this development, see Tax Alert 2024-1784. Kansas: The Kansas Department of Revenue (KS DOR) issued guidance on changes to net operating loss (NOL) provisions for individual income tax purposes enacted in 2024 (see SB 410). For tax years beginning after December 31, 2017, individuals who carried back federal NOLs arising in a tax year beginning after December 31, 2017 and before January 1, 2021, under IRC Section 172(b)(1) as modified by the federal CARES Act, must subtract the federal NOL carryback for each applicable year. Federal NOL carrybacks that exceed Kansas taxable income may be carried forward up to 20 tax years. The law gives taxpayers until April 15, 2025, to claim a refund or file an amended return related to this change for tax years 2018, 2019 or 2020. The KS DOR noted that if an NOL was previously allowed as a deduction for a particular year, a subtraction modification for an NOL carryback under the amended law will not be allowed for the same tax year. Kan. Dept. of Rev., Notice 24-17 "New Operating Loss Carryback" (Aug. 15, 2024). New York: An industry trade association for catalog, online, direct mail and other remote-selling merchants and their suppliers has filed a motion for summary judgment in the New York Supreme Court for Albany County, seeking to have New York's recently adopted regulations concerning P.L. 86-272 and its application to activities conducted over the internet (20 N.Y.C.R.R Section 102.10)9 declared invalid as they conflict with federal law. Alternatively, if the regulation is not declared invalid in whole or in part, the trade association is seeking to have the regulation declared invalid to the extent it applies to any time-period before the date of the regulation's publication, so as not to violate its members' due process rights. The trade association also asserts that the New York Department of Taxation and Finance lacked the authority to rewrite P.L. 86-272 and citing the recent U.S. Supreme Court ruling in Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024), contends that the "Department's interpretation of P.L. 86-272 should be accorded no deference." American Catalog Mailers Association v. N.Y. Dept. of Taxn. And Finance, motion for summary judgement, Index No.: 903320/2024 (N.Y. S.Ct., Albany Cnty., Aug. 29, 2024). Tennessee: In response to a ruling request, the Tennessee Department of Revenue (TN DOR) discussed sourcing receipts for franchise and excise tax apportionment purposes, finding that an out-of-state taxpayer, who principally sells its product to large wholesale distributors, must source its sales to the location of the wholesale distributors it sells its products to and not to the location of subsequent buyers (i.e., the ultimate end-users). The TN DOR found that the sales to Tennessee-located wholesale distributors are Tennessee sales and it rejected the taxpayer's argument that, since the products remains with the wholesale distributors from 14 to 25 days, a de minimis principle should apply. The TN DOR also found, among other reasons, that although there exist situations in which Tennessee contemplates excluding from the receipts factor sales to the ultimate end-user, those situations are not applicable to the taxpayer's situation because the taxpayer is not engaged in drop shipment transactions. Tenn. Dept. of Rev., Revenue Ruling #24-06 (July 31, 2024). Maine: The Maine Revenue Services (MRS) issued guidance on changes related to the collection and remittance of sales and use tax on leased or rented tangible personal property. Starting January 1, 2025, sales tax will be imposed on each periodic lease or rental payment paid by the lessee. (Through the end of 2024, tax is paid upfront on the full value of the lessor's purchase price of the leased or rented property.) Also starting on that date, lessors will need to present their resale certificate to make a tax-free purchase. Tax applies to each individual lease or rental payment on all tangible personal property leased or rented on or after January 1, 2025, including on leases and rentals that began before 2025. The guidance also explains the new sourcing rules for leases or rentals of: (1) tangible personal property; (2) motor vehicles, trailers, semitrailers, truck campers or aircraft; and (3) transportation equipment used in interstate commerce. These new sourcing rules take effect on January 1, 2025. The MRS noted that the sourcing of leases and rentals of (1) tangible personal property and (2) motor vehicles, trailers, semitrailers, truck campers and aircraft, depends on if the lease requires recurring periodic payments. Leases and rentals of such that do not require recurring payment, as well as leases/rentals of "transportation equipment," will be sourced in the same manner as a sale of tangible person property under 36 M.R.S. Section 1819(2). The MRS also mentioned the limited refund period for qualified lessors. The refund is available for sales and use tax previously paid on the purchase of a qualifying lease or rental property on or after January 1, 2023 and before January 1, 2025, for which the qualified lessor collected and remitted the tax on the lease or rental of the property on or after January 1, 2025. Maine Rev. Serv. Sales, Fuel & Special Tax Division, General Information Bulletin No. 114 (Aug. 27, 2025). Michigan: The Michigan Department of Treasury (MI DOT) posted an article on the taxability of non-fungible tokens (NFTs) — i.e., "a digital asset that links ownership to unique physical or digital items … such as works of art, music, or videos." The MI DOT said that "[c]urrently, Michigan does not tax NFTs representing digital goods nor does it generally tax digital goods" reasoning that "[d]igital NFTs do not fall within the definition of 'tangible personal property'." The MI DOT further explained that in determining whether an NFT transaction is taxable depends on whether the NFT represents tangible or digital property. If the NFT represents an ownership interest in tangible personal property, then the sale constitutes the sale of taxable tangible personal property. If, however, the NFT represents something that is purely digital (e.g., a digital image or sound), the transaction is not subject to Michigan sales tax. Mich. Dept. of Treas., "Treasury Update" (Aug. 2024). New Jersey: New law (S. 721/A. 2812) effective October 1, 2024, exempts sales of (1) investment metal bullion (e.g., gold, silver, platinum and palladium) and (2) investment coins made of any metal valued of at least $1,000, from sales and use tax. The term "investment metal bullion" does not include "any precious metal that has been assembled, fabricated, manufactured, or processed in one or more specific and customary industrial, professional, esthetic, or artistic uses." The term "investment coin" does not include jewelry, artwork made of coins, or commemorative medallions. N.J. Laws 2024, ch. 64 (S. 721/A. 2812), enacted on Sept. 12, 2024. New York: In response to a ruling request, the New York Department of Taxation and Finance (NY DOTF) said that a foreign company providing information technology services to customers with New York shipping and postal addresses but invoice addresses in Florida must collect sales tax on receipts from taxable services in New York. The NY DOTF explained that for New York sales tax purposes, "the point of delivery or point at which possession is transferred to the purchaser controls the tax incident and the tax rate." Accordingly, sales tax is collected at the combined state and local rate in effect for the jurisdiction where the delivery of the service occurs, even if the invoice address is outside the state. N.Y. Dept. of Taxn. and Fin., TSB-A-24(33)S (Aug. 16, 2024). Texas: In response to a ruling request, the Texas Comptroller of Public Accounts (Comptroller) determined that a residual fee the taxpayer receives from a credit card processor for promoting the credit card processor's services to the taxpayer's clients is not subject to Texas sales and tax. The residual fee is compensation for promoting a service and submitting executed merchant agreements to the credit card processor. These activities, the Comptroller found, do not fall under the list of taxable services and, as such, they are not subject to tax. Tex. Comp. of Pub. Accts., Private Letter Ruling No. 202407021L (July 24, 2024). Alaska: New law (HB 50) provides that the carbon oxide sequestration credit allowed for federal taxes under IRC Section 45Q may not be applied as a credit against a taxpayer's Alaska corporate income tax liability. Alaska Laws 2024, ch. 23 (HB 50), signed by the governor on July 31, 2024. Alaska: New law (HB 307) exempts from state and local ad valorem, income and excise taxes electricity generation facilities and electricity storage facilities constructed and placed into service on or after July 1, 2024, if the electricity is operated by (1) a public utility or joint action agency or (2) an entity other than a public utility and provides power only to a public utility. HB 307 took effect August 1, 2024. Alaska Laws 2024, ch. 24 (HB 307), signed by the governor on July 31, 2024. New Jersey: New law (A. 4619) modifies and enhances New Jersey's Historic Property Reinvestment Program and Brownfields Redevelopment Incentive Program. The amount of credit available under the Historic Property Reinvestment Program is increased to 60% (from 45%) of the cost of rehabilitation of the qualified property or $12 million (from $8 million), whichever is less, if the qualified property is in a qualified incentive tract or government-restricted municipality. The credit for rehabilitation of any other qualified property, not including transformative projects, is increased to 50% (from 40%) of the cost of rehabilitation of the qualified property or $8 million (from $4 million), whichever is less. In addition, eligibility for the credit is expanded to include certain facade rehabilitation projects. The amount of credit available for these projects is 50% of the cost of facade rehabilitation or $4 million, whichever is less. The law modifies the tax credit eligibility requirements for a business to demonstrate a project financing gap. It also amends definitions of "cost of rehabilitation," "qualified property," "rehabilitation" and "selected rehabilitation period," and it adds new definitions of "cost of facade rehabilitation," "exterior building features," "facade rehabilitation project," "structural components," "total cost of rehabilitation," and "total cost of facade rehabilitation project." The law makes various changes and enhancements to the Brownfields Redevelopment Incentive Program. The amount of credit available for the remediation of a redevelopment project in a qualified incentive tract or government-restricted municipality is increased to up to 80% (from 60%) of the actual remediation costs, 80% (from 60%) of the projected remediation costs set forth in the redevelopment agreement or $12 million (from $8 million), whichever is less. The amount of credit available for a redevelopment project erecting a solar panel array on the site of a closed sanitary landfill depends on the location. The credit is 100% of the costs of remediation and capping the landfill, $12 million if the project is in a qualified incentive tract or a government-restricted municipality, or $8 million for any other in-state location, whichever is less. For other remediation projects, the amount of the credit is 60% (from 50%) of the actual remediation costs, 60% (from 50%) of the projected remediation costs set forth in the redevelopment agreement or $8 million (from $4 million), whichever is less. The law amends project eligibility requirements for the credit. The law allows the Economic Development Authority (EDA) to review applications under this program on a rolling basis. If, however, the EDA determines that demand for credit will exceed the amount of available credit, the applications that are submitted by a certain date will be reviewed on a competitive basis. These changes have various effective dates. N.J. Laws 2024, ch. 61 (A. 4619), signed by the governor on September 4, 2024. Colorado: New law (HB 24B-1003) makes permanent and expands the property tax exemption for agricultural equipment used in the production of agricultural products in any controlled environment agriculture (CEA) facility to also apply to such equipment used in a greenhouse. The definition of "agricultural equipment that is used on the farm or ranch or in a CEA facility in the production of agricultural products" is expanded to include any personal property within a greenhouse that can be removed from the greenhouse and is used in direct connection with operating the greenhouse. The greenhouse must be used solely for planning or growing crops in a raw or unprocessed state. The sole purpose of growing the crops in the greenhouse must be for monetary gain from the wholesale of plant-based food for human or livestock consumption. The law also removes the sunset date of the exemption, otherwise it would have ended at the end of 2027. HB 24B-1003 takes effect on November 28, 2024. Colo. Laws 2024 (2024 Extraordinary Session), ch. 2 (HB 24B-1003), signed by the governor on September 6, 2024. Colorado: New law (HB 24B-1001) reduces property tax assessment rates for residential and nonresidential property. Starting with the 2025 property tax year, the residential property assessment rates for local government entities' mill levies (other than school districts) is reduced for all residential property from 6.4% to 6.25%. If, however, the statewide actual value growth exceeds 5% from 2024 to 2025, the rate will be reduced to 6.15%. For property tax years beginning on January 1, 2026, if the actual value growth is 5% or less, then the rate would be reduced from 6.95% to 6.8%, with a reduction to 6.7% if the actual value growth is more than 5%. For property tax years beginning on January 1, 2025 and January 1, 2026, the residential assessment rates for school district mill levies is reduced from 7.15% to 7.05, with a reduction to 6.95% if the statewide actual value growth exceeds 5% from 2024 to 2025. For property tax years beginning on January 1, 2025, the valuation for assessment for personal property and nonresidential real property is 27% of the actual value. For property tax years beginning on January 1, 2026, the valuation for assessment of personal property and most nonresidential property classes will be reduced to 26%, except for property classified as improved commercial and agricultural. The the valuation for assessment is further reduced to 25% for the 2027 property tax year and thereafter. The law extends the 2023 property tax year rates and value subtractions applicable to lodging property to the 2024 property tax year. Thus, the rate for 2024 is 27.9% (from 29%) of an amount equal to the actual value minus the lesser of $30,000 or the amount that reduces the valuation for the assessment to $1,000. The changes in HB 24B-1001 take effect only if both ballot initiatives that would reduce valuations for assessment are either withdrawn or not approved by voters. Colo. Laws 2024 (2024 Extraordinary Session), ch. 1 (HB 24B-1001), signed by the governor on September 4, 2024. New Hampshire: New law (HB 1400) provides that a city or town may adopt tax relief for conversion from office, industrial or commercial use to residential use. Under the law, property tax on a qualifying structure, for a period-of-time to be determined by a local governing body, will not increase because of such conversion. A qualifying structure may not be granted relief more than once in a 20-year period. In cities and towns that have adopted tax relief for these types of conversions, the term "qualifying structure" is expanded to also mean "a building or structure being used for office use, in whole or part, if such use is converted to residential use, in whole or in part, in an office conversion zone … " These changes took effect July 1, 2024. N.H. Laws 2024, ch. 370 (HB 1400), signed by the governor on Aug. 23, 2024. Multistate: EY's Employment Tax Advisory Services group has developed a monthly publication summarizing the latest employment tax and other payroll developments in an easy-to-read format. Developments in US federal, state and local payroll and human resources matters are highlighted, as are our insights to improve US employment tax and payroll compliance. A copy of the publication is available via Tax Alert 2024-1661. New Hampshire: Governor Chris Sununu signed into law HB 2101, which effective September 10, 2024, increased from $300 to $3,000 the wage amount that employers can directly pay to the descendants of deceased employees in the absence of a probate proceeding notice. Under the law, New Hampshire employers can pay a deceased employee's wages (up to $3,000) directly to a descendant upon demand for payment. If multiple descendants make claim to the wages, payments should be made to them in the order specified in RSA 561:1. For more on this development, see Tax Alert 2024-1768. Federal: In Revenue Procedure 2024-35, the IRS announced the new Affordable Care Act (ACA) affordability percentage of 9.02% for 2025 employer health care plans. After three years of decreases, this percentage increase gives employers more flexibility in setting employee premiums without making their coverage unaffordable under the safe harbor. For additional information on this development, see Tax Alert 2024-1657. Alaska: New law (HB 50) amends the oil and gas production tax to expand the list of items that are not "lease expenditures" to include "costs incurred for carbon capture or carbon storage, including fees incurred under AS 41.06.160, surcharges incurred under AS 41.06.175, or costs associated with obtaining, operating, or maintaining a license or lease under AS 38.05.700 - 38.05.795." The law defines "carbon capture" and "carbon storage." Alaska Laws 2024, ch. 23 (HB 50), signed by the governor on July 31, 2024. New Mexico: The New Mexico Energy, Minerals and Natural Resources Department, Energy, Conservation and Management Division adopted new rules NMAC 3.4.24.1 - .17 "Corporate Income Taxes" and NMAC 3.3.37.1 - .17 "Personal Income Taxes" to establish procedures for administering the certification program for the clean car charging unit corporate and personal income tax credit. The credit may be claimed for tax years after January 1, 2024 and before January 1, 2030. The rule describes the application process, the required attachments to the application, the requirements for clean car charging, how to calculate the credit, the process for certifying eligibility for the credit, and the process for claiming the credit. The rules took effect on September 10, 2024. (N.M. Register, Vol. XXXV, Issue 17, Sept. 10, 2024). Federal: On September 13, 2024, the United States Trade Representative (USTR) finalized its modification of actions relative to 14 product groups as either subject to an increase in Section 301 of the Trade Act of 1974 (Section 301) tariffs or eligible for exclusions based on conclusion of its four-year review. These modification actions are in response to a USTR May 28, 2024 Notice (USTR May Notice). The USTR May Notice specifically covered 382 Harmonized Tariff Schedule of the United States subheadings and 14 product groups with an approximate annual trade value of US$18b, including steel and aluminum, semiconductors, electric vehicles, batteries, critical minerals, solar cells, ship-to-shore cranes and medical products. The USTR identified these sectors as targeted by China for dominance, or sectors where the United States recently made significant domestic investments that warranted economic and national security protection. For additional information on this development, see Tax Alert 2024-1710. International - Kenya: The High Court in Kenya issued a decision (Commissioner of Domestic Taxes v Sigona Golf Club, et al.) in favor of several golf clubs and the Kenya Golf Federation (Respondents), affirming that entrance fees and subscription fees charged by golf clubs are exempt from Value Added Tax. For more on this development, see Tax Alert 2024-1644. International - Peru: Beginning December 1, 2024, nonresident providers of digital services and sellers will be obliged to declare and pay an 18% Value Added Tax to the Peruvian Tax Authority. For more on this development, see Tax Alert 2024-1696. International - Peru: A new Supreme Decree establishes a first set of regulations for Legislative Decree 1623, which required nonresident digital service providers and sellers to register with the Value Added Tax (VAT) Registry and to remit to the Peruvian Tax Authority any VAT withheld on the payments made by customers for digital services. For more on this development, see Tax Alert 2024-1614. International - Peru: The Peruvian Tax Authority has established rules for the registration of nonresident providers and sellers in the Value-Added Tax Registry, introducing Resolution 000173–2024 on August 31, 2024. For additional information on this development, see Tax Alert 2024-1631. Because the matters covered herein are complicated, State and Local Tax Weekly should not be regarded as offering a complete explanation and should not be used for making decisions. Any decision concerning matters covered herein should be reviewed with a qualified tax advisor.
Document ID: 2024-1831 | ||
